"There seems to be a type of stealth bull market in the platinum group as the metal begins moving up and regaining lost ground against the price of gold. The metal has been grinding higher since the beginning of the year and is currently up nearly $400 since then but has mostly gone unnoticed by the financial press."

{It's not been unnoticed by me. I've been tracking it for some time on my desktop with the widget from Lear Capital: http://ow.ly/78CMe It has continued to intrigue me and I think it is large part a relation to the economic woes. Dan goes on to make some valid points about the current rise}

Anyone who thinks our toxic financial system is stable is delusional. Why are we doomed? Those consuming over-amped "news" feeds may be tempted to answer the culture wars, nuclear war with North Korea or the Trump Presidency. The one guaranteed source of doom is our broken financial system, which is visible in this chart of income inequality from the New York Times: Our Broken Economy, in One Simple Chart.

While the essay's title is our broken economy, the source of this toxic concentration of income, wealth and power in the top 1/10th of 1% is more specifically our broken financial system.

Gold has conducted what some are calling a “stealth rally” over the past month.

After bottoming at $1,206 per ounce on July 10, gold is at $1,286 this morning, a healthy 6.5% gain in just over one month.

The has been welcome relief for gold investors after a series of “flash crashes” on June 14, June 26 and July 3 contributed to a gold drawdown from $1,294 per ounce to $1,206 per ounce between June 6 and July 10. At that point it looked as though gold might fall through technical resistance and tumble to the $1,150 per ounce range.

But the new rally restored the upward momentum in gold we have seen since the post-election low on Dec. 15, 2016. Gold seems poised to resume its march to $1,300 after the paper gold bear raids of late June.

The physical fundamentals are stronger than ever for gold. Russia and China continue to be huge buyers. China bans export of its 450 tons per year of physical production.

Gold refiners are working around the clock and cannot meet demand. Gold refiners are also having difficulty finding gold to refine as mining output, official bullion sales and scrap inflows all remain weak.

Financial expert Egon von Greyerz (EvG) says the central bankers did not fix the problem that caused the last global economic meltdown. EvG points out, “Did they save the system? For ten years they did, but they didn’t save it. They made the problem a lot bigger. Global debt has gone from $120 trillion in 2006 to $225 trillion today. Central banks have printed another $18 trillion. So, the situation right now is a lot worse than it was then. So, the bubble is much bigger. And remember last time, interest rates worldwide were around 5% to 6% ten years ago. . . .Today, they are zero or negative in many countries. They cannot achieve anything by adjusting interest rates. Well, they can make them more negative, but people are not going to give them any money with negative interest rates.”

EvG has decades of experience as a top executive in the European banking system, and he contends, “The ECB risks are increasing exponentially.

The gold mining industry is massively depleting its reserves, not finding new deposits fast enough, and could be on the cusp of its most profitable turning point ever.

Gold mine supply will peak in 2019 and continue falling through at least 2025, according to BMO Capital Markets and Bloomberg.

Producers like Newmont (NYSE:NEM), Goldcorp (NYSE:GG), Barrick (NYSE:ABX) and Kinross (NYSE:KTO) are looking to the Western United States for their future pipeline. They have all made new investments there and are searching for more. Acquisitions are being focused in stable political and operating environments.

By Ronald-Peter Stoeferle, Incrementum AG Liechtenstein August 8 (King World News) – As discussed above, we currently believe that the probability of a US recession is significantly higher than is generally assumed. But how would a recession affect price inflation dynamics?…

Another day, another record high for the Dow… now above the 22,000-point mark for the first time in history.

And based on the CAPE ratio – a valuation measure that compares stock prices to the average of the past 10 years of inflation-adjusted earnings – the S&P 500 is more expensive than it was right before the 1929 crash.

No volatility. No worries. If there is a train wreck coming, investors think they are all on the bus.

Debt Disaster

“Yes, stock prices keep going up… here in France, too,” said a wise man who came over for dinner last night.

People sometimes ask why I’m so interested in gold, given that I am not a gold dealer, mining executive or financial advisor and when I’m not even trying to sell people a subscription newsletter? The answer is twofold. First, I believe that the world needs to return to the gold standard for a number of reasons too numerous to cite here. Second, from a legal standpoint, gold is the most obvious example of a corrupted market. Most rational people know it is heavily manipulated but no one ever does anything about it. Unlike manipulators in stocks, bonds and most commodities, gold and silver manipulators no longer try hard to hide. Their activities are blatant, open and obvious. That makes the metal an excellent example of what’s wrong with markets in general.

We are living in the greatest debt bubble in the history of the world. In 1980, total government and personal debt in the United States was just over the 3 trillion dollar mark, but today it has surpassed 41 trillion dollars. That means that it has increased by almost 14 times since Ronald Reagan was first elected president. I am searching for words to describe how completely and utterly insane this is, but I am coming up empty. We are slowly but surely committing national suicide, and yet most Americans don’t even understand what is happening.

According to 720 Global, total government debt plus total personal debt in the United States was just over 3 trillion dollars in 1980. That broke down to $38,552 per household, and that figure represented 79 percent of median household income at the time.

Today, total government debt plus total personal debt in the United States has blown past the 41 trillion dollar mark. When you break that down, it comes to $329,961.34 per household, and that figure represents 584 percent of median household income.

While the highly inflated value of the U.S. Retirement Market reached a new high this year, something is seriously wrong when we look behind the scenes. Of course, Americans have no idea that the U.S. Retirement Market is only a few steps from falling off the cliff, because their eyes are focused on the shiny spinning roulette wheel called the Wall Street Stock Market. Yes, everyone continues to place their bets, hoping and praying that they will win it big, so they can retire in style. Unfortunately, American gamblers at the casino have no idea that the HOUSE is out of money. The only thing remaining in their backroom vaults is a small stash of cash and a bunch of IOU’s and debts.

Once again there was an overnight “flash crash” in Comex gold futures trading. This time it occurred at 3:56 a.m. EST at one of the quietest trading periods of the roughly 23 hour electronic trading day. India has gone sleep. The Shanghai Gold Exchange has been closed for about 90 minutes and the London markets are just beginning to function. I guess someone decided it was a good time to unload close $500 million worth of paper gold into the Comex’s Globex electronic trading system

Analyst/trader Gregory Mannarino says the Federal Reserve just did an about-face on raising interest rates in a matter of weeks. Mannarino contends, “This is incredible and hard to get my head around. This has got to be the flip-flop of all flip-flops. At the last FOMC meeting, Janet Yellen was practically pounding the table talking about how they were going to be continuing to raise rates, that they are going to start unloading their balance sheet here, and then she does an absolute 180. I am sitting there in real time watching it (this past week). My face dropped, and the moment I heard this, I started buying everything I could. . . . I thought this is it. The market is going to keep going higher. . . . The Federal Reserve has created a freaking monster. These distortions are now going to get much worse because Janet Yellen has given these markets the green light to go record up, record up and record up.”

The fragility of our financial buffers will only be revealed when they fail in the next crisis.

While buffer has a specific meaning in chemistry, I am using the word in the broad sense of a reserve resource that absorbs the initial destructive impacts of crises or system overloads. Marshland along a sea coast is a buffer against destructive storm waves, for example. A savings account acts as a buffer against financial drawdowns or losses of income that would otherwise quickly cascade into a full-blown crisis. Redundancy of resources can act as a buffer. If an airline maintains an aircraft in reserve, this reserve plane acts as a buffer against the disruption to the airline's scheduled flights should one of its aircraft be unexpectedly removed from service by a mechanical failure. The reserve aircraft can replace the plane that was withdrawn from service with minimal disruption.

Each year since 1987, I have always used the final two weeks of the month of August as a shopping period in a manner not unlike the “Back-to-School” kind only the wares I seek are junior precious metals stocks as opposed to school uniforms, pens, and books. It began after I had been speaking with one of the finest brokers I had ever had the opportunity to know, Edmonton’s late George Milton, whose claim to fame was being the early financier for Bre-X (Not to worry, he and the bulk of his clients were long gone by the time the fraud was revealed). George would tell clients around mid-May to raise cash because after June 1, he would be AWOL. Because there were no cell phones, internet, text messaging or Twitter, that meant that George would be out-of-contact until mid-August and, true to form, on August 15th, he would arrive at the office, open his Rolodex, and begin to call clients. By the time mid-August arrived, the first shares he would buy were the ones he sold in mid-May and amazingly, 90% of those names had fallen 50% (or more) due to the illiquidity and disinterest so typical of the June-July period in the Canadian junior mining markets. He would spend the next two weeks accumulating his list and then watch as the mid-September reversal of fortune arrived with heightened liquidity and interest and prices paid for his late summer shopping spree would advance.

Market analyst Lynette Zang says get ready for a “money standard shift.” A reset in how we buy and sell things is being put into place. Zang contends, “Look at the crypto currency area because they know that’s where they want to go. They have to take us there so they can get rid of cash, and they can control everything directly. . . . Generally speaking, all these new crypto coins that are coming out and are making lots of money and people marry that money because of nominal confusion, what is really happening is they are preparing us . . . for a money standard shift.”

Zang explains that the U.S. dollar has lost about 96% of its value since inception of the Federal Reserve, and its value is “nearing the bottom. . . . So, there is no place else to go but to digital currency,” says Zang.

How shocked would you be if it was announced that the U.S. had just entered a recession, that is, a period in which gross domestic product (GDP) declines (when adjusted for inflation) for two or more quarters? Would you really be surprised to discover that the eight-year long "recovery," the weakest on record, had finally rolled over into recession? Anyone with even a passing acquaintance with the statistical pulse of the real-world economy knows the numbers are softening. -- Auto/light truck sales: either down or off a cliff, depending on how much lipstick has been applied to the pig.

The real demand for bitcoin will not be known until a global financial crisis guts confidence in central banks and politicized capital controls.

I've been writing about cryptocurrencies and bitcoin for many years. For example: Could Bitcoin Become a Global Reserve Currency? (November 7, 2013) I am an interested observer, not an expert. As an observer, it seems to me that the mainstream--media, financial punditry, etc.--as a generality don't really grasp the dynamics driving bitcoin and the other cryptocurrencies. What the mainstream does get is speculative frenzy. New technologies tend to spark speculative manias once the adoption rate exceeds the Pareto Distribution's critical threshold of 4%, and opportunities to buy into the new technology become available to the general public.

Alas, all my dreams of achieving immortality through my Staggering Mogambo Brilliance (SMB) in economics are turning to bitter dust. This is probably because I am not very bright have never had an original thought in my whole life. For the record, though, I am officially blaming this outrage on everybody but me.

Yet, in my deep despair, I can still delight in childishly upstaging real geniuses, like Albert Einstein, who said something to the effect that compound interest was a miracle.

Here is where I haughtily say, with a delicious hint of condescending disdain in my voice, “Einstein? Ha! What does a theoretical physicist know about economics? If he was so smart, he would have known that the biggest miracle is a fiat currency! Taa daa! Who’s your daddy now, chump?”

Precious metals futures were mixed on Monday, but ended ahead in July with advances ranging from 1% to 5.8%. Gold and silver traded near 7-week highs.

Gold for December delivery — the new, most active contract — declined $1.90, or 0.1%, to settle at $1,273.40 an ounce on the Comex division of the New York Mercantile Exchange.

"Gold had increased noticeably … despite what were in fact good U.S. economic data — the U.S. economy grew by 2.6% in the second quarter — because the figures also indicated declining inflation pressure. This reduces the pressure on the Federal Reserve to further hike interest rates in the near future," MarketWatch quoted Carsten Fritsch, commodities analyst at Commerzbank.

Earlier this month, we noted that speculative traders – as measured by the U.S government’s weekly Commitments of Traders (“COT”) report – were fleeing from precious metals. As we wrote in the July 11 Digest…

Net speculative positions have fallen from an all-time record of more than 100,000 contracts this spring to less than 30,000 contracts today. And they’re quickly closing in on levels that have marked important bottoms in the past.

Speculative positions in gold – which didn’t surpass last year’s record this year – have experienced a similar decline.

Again, this doesn’t mean the next rally is imminent… But it suggests we’re finally close to a significant bottom in gold and silver.

Stay patient… Your next great buying opportunity is approaching.

Since then, speculators have continued to unwind their bullish bets. According to the latest COT data, net speculative positions have now plunged to fewer than 10,000 contracts as of last week…

If you study these charts closely, you can only conclude that the US economy is doomed to secular stagnation and never-ending recession.

The stock market, bond yields and statistical measures of the economy can be gamed, manipulated and massaged by authorities, but the real economy cannot. This is espcially true for the core drivers of the economy, real (adjusted for inflation) household income and real disposable household income, i.e. the real income remaining after debt service (interest and principal), rent, healthcare co-payments and insurance and other essential living expenses. If you want to predict the future of the U.S. economy, look at real household income. If real income is stagnant or declining, households cannot afford to take on more debt or pay for additional consumption.

Each new policy destroys another level of prudent fiscal/financial discipline.

The primary driver of our economy--financialization--is in a death spiral. Financialization substitutes expansion of interest, leverage and speculation for real-world expansion of goods, services and wages.

Financial "wealth" created by leveraging more debt on a base of real-world collateral that doesn't actually produce more goods and services flows to the top of the wealth-power pyramid, driving the soaring wealth-income inequality we see everywhere in the global economy.

As this phantom wealth pours into assets such as stocks, bonds and real estate, it has pushed the value of these assets into the stratosphere, out of reach of the bottom 95% whose incomes have stagnated for the past 16 years. ...

Humanity appears to default to magical thinking when faced with untenable situations that demand systemic change.

How would extraterrestrial anthropologists characterize Earth's dominant socio-economic system? It's not difficult to imagine their dismaying report: "Earth's economy glorifies waste. Its economists rejoice when a product is disposed as waste and replaced with a new product. This waste is perversely labeled 'growth.' Aimless wandering that consumes fossil fuels is likewise rejoiced as 'growth.' The stripping of the planet's oceans for a few favored species of edible fish is also considered 'growth' as the process of destroying the ocean ecosystem generates sales of the desired seafood.

A world in which "we do these things because they're easy" has one end-state: collapse.

On September 12, 1962, President John F. Kennedy gave a famous speech announcing the national goal of going to the moon by the end of the decade. (JFK's speech on going to the moon.) In a memorable line, Kennedy said we would pursue the many elements of the space program "not because they are easy, but because they are hard." Our national philosophy now is "we do these things because they're easy"-- and relying on debt to pay today's expenses is at the top of the list. What's easier than tapping a line of credit to buy whatever you want or need? Nothing's easier than borrowing money, especially at super-low rates of interest. We are now totally, completely dependent on expanding debt for the maintenance of our society and economy. Every sector of the economy--households, businesses and government--all borrow vast sums just to maintain the status quo for another year.

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